11 June 2009 07:46 [Source: ICIS news]
(Revises fourth paragraph; adds pricing information in paragraphs five and six; adds quote in paragraph seven)
Trade in Asian biodiesel had been muted so far this year as market conditions were made unfeasible due to rising feedstock vegetable oil values and tepid crude oil prices. This made vegetable oil-based biodiesel an unattractive alternative to traditional fossil fuels.
Most biodiesel plants in Indonesia and Malaysia were idled or were operating at very low rates as poor demand and thin margins capped production in the region.
However, the uptrend in crude oil prices in recent weeks, as well as relative stability in palm oil prices, might provide a much-needed boost to trade in the struggling Asian biodiesel industry, market sources said, as the spread between prices of crude oil derivatives and vegetable oils was narrowing.
Conversely, healthy vegetable oil production and poor export volumes weighed on crude palm oil (CPO) prices, with June delivery futures trading at ringgit (M$) 2,500/tonne ($714/tonne), falling M$75/tonne from 4 June.
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"The numbers seem workable, but there are no buyers yet," the marketing executive of a major Malaysian plant said, adding that most traders were biding their time to see if the situation was sustainable.
($1 = M$3.50)
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